Innovation

Great Ideas: Dump bad clients

Written by ProfitGuide

Letting go of a major account isn’t easy. In The New Successful Large Account Management, Robert Miller and Stephen Heiman write that most businesses resist the obvious solution to accounts that are marginal or fatally high-maintenance: dump ’em. Firing a customer goes against the sales professional’s perennial optimism that if you just keep plugging away, eventually everything will come out alright. Firms will often pour resources into a sinkhole rather than admit it was a mistake to pursue the business in the first place. And account managers may be wary of butting heads with senior managers who have enshrined the importance of specific accounts in “one of those 20-pound, holy-writ account plans.”

If you can rid yourself of such self-defeating attitudes—ideally by saddling unsuspecting competitors with your hopeless accounts—you’ll be amazed by the resources freed up to pursue profitable customers. But how do you know an account is hopeless? The authors offer four rules of thumb:

  1. You’re on the outside track. A competitor has a unique strength you can’t match, your own strengths are irrelevant to the customer or the competitor has been too long entrenched in the account. Yes, you should go head-to-head with your competitors, but only when there’s a reasonable chance of a return.
  2. It’s not your real business. Resist the temptation to provide service outside your area of expertise. If you’ve broadened your efforts to a relatively unknown field and they’re draining your resources from more-profitable business, it’s time to “get back to the knitting.”
  3. You’re flying blind. An information vacuum makes it impossible to sell or manage effectively. If you have an account in which you’re routinely having to feel your way, you always feel you “need more data” and you’ve run into multiple surprises dealing with this customer, get out of there.
  4. You’re stuck in a time and money pit. You find yourself in a situation like that of the protagonists in the Hollywood comedy The Money Pit, in which a couple whose new house is constantly in need of repair sucks their bank account dry. As a rule of thumb, you should cut any project or activity on an account that has already cost you two to three times its original cost estimate.
Originally appeared on PROFITguide.com